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Jackson Mueller
Associate Director, Center for Financial Markets
Jackson Mueller is an associate director at the Milken Institute's Center for Financial Markets. He focuses on fintech, capital formation policy and financial markets education initiatives. Prior to joining the Institute, Mueller was an assistant vice president at the Securities Industry and Financial Markets Association (SIFMA), where he focused on...
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FinTech in Focus

By: Jackson Mueller
December 01, 2015
   
   

Headlines

Rise of the FinTech Funds
Anthemis Group, a venture capital and advisory firm based in the UK, is seeking to raise a $100 million venture capital fund to invest in FinTech startups, and plans to open an office in New York in 2016. Neither the announcement nor the amount should come as a surprise. A number of other funds and advisory firms have raised or are seeking to raise significant sums for investment in FinTech. For example, Open Ocean Capital, based in Finland, announced that part of its 100 million euro fund may be devoted to European firms developing blockchain technology. London-based Illuminate Financial Management recently announced the closure of the first round of funding for its IFM Fintech Opportunities Fund, with Deutsche Börse and Markit leading the round. Meanwhile, Japan-based Internet-services firm Rakuten launched the $100 million Rakuten FinTech Fund, while Middle East Venture Partners raised $30 million for its Middle East Venture Fund II for investments into early-stage technology and mobile businesses in the Middle East and North Africa.

The Promise and Peril of China’s Peer-to-Peer Lending Industry
One of China’s largest peer-to-peer lenders, Lufax, is preparing for an IPO in mid-2016, with the company likely to raise as much as $5 billion. The news comes as Yirendai, another P2P lender, filed a Form F-1 with the U.S. Securities and Exchange Commission to list on the New York Stock Exchange in a $100 million IPO, and as Shanghai-based Dianrong.com expands into a South Korean marketplace that is relatively young. Of course, there is still a lot of concern about China’s P2P marketplace despite several record-setting months of loan originations. Recent photos of empty office spaces, on top of the market turmoil which resulted in roughly $1.2 billion in investor losses in China’s P2P sector over the past 18 months, certainly adds to the concern.

And speaking of China, Apple is looking to introduce Apple Pay there by February 2016. This is an interesting development given the difficulty the company has had finding agreement with government officials and forging partnerships with leading Chinese financial institutions.

UK Developments
Last week, UK Chancellor George Osborne announced efforts to facilitate small business capital formation and to enable savers to hold crowdfunding debt securities in ISAs (pg. 118 of the Spending Review and Autumn Statement 2015). One way to raise capital for small and mid-sized firms is to increase awareness of alternative financing options, according to a recent report by GLI Finance. GLI concluded that the lack of awareness contributes to an “economic hole” of lost opportunity that could add up to £20 billion by 2020. And, just before the release of the Autumn Statement, the Financial Conduct Authority released a call for comment on development and adoption of RegTech, first announced back in March with the release of the UK Budget 2015. Separately, the UK is making inroads into the FinTech startup scene across the Mediterranean and in Japan, through various trade missions and events.

SWIFT, BIS Reports Released on Payments Providers, Digital Currencies
Two noteworthy reports were released within the past week. The first, from SWIFT (the Society for Worldwide Interbank Financial Telecommunication), focuses on innovative services provided by third party payment providers and cryptocurrency developments. It also deals with additional policy recommendations beyond the EU’s payment services and anti-money laundering directives. The second report, from the Bank for International Settlements Committee on Payments and Market Infrastructures, focuses squarely on digital currencies and potential areas of interest to central banks. Both reports were made public as bitcoin exchange trading volumes hit a record high.

And speaking of payments, Square released its NFC reader last week, which allows small businesses to accept Apple Pay, in addition to Android Pay and Samsung Pay. Separately, CBS’ “60 Minutes” aired a segment on M-Pesa in Kenya that is well worth a watch.

Branching Out: Not Just Silicon Valley Anymore
A report from Jones Lang LaSalle assesses the attractiveness of U.S. cities to the tech industry, an effort by the firm to identify potential markets beyond Silicon Valley and San Francisco. Among other things, the report addresses affordability, a big issue for new tech startups that struggle with the cost of operating in well-known tech hotspots.

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